CommScope Shows Its Fiber

Shares jump after the latest fiber-optic earnings beat.
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CommScope's

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optimism signals a return of good times to the bandwidth bulls.

Shares of the Hickory, N.C., communications cabling shop shot up 10% Friday after executives boosted the year's sales guidance to about $1.86 billion, up 15% from last year.

CommScope sells copper data cables for computer networks as well as fiber-optic cable used by cable and phone companies. The company says it is seeing increased orders from businesses rushing to boost office network capacity and from phone companies such as

AT&T

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pushing fiber out closer to customers to offer TV.

The AT&T video push is fairly well documented, but it is the office upgrade trend that has fans and CommScope executives pumped up.

"I think this is the front end of a cycle," a CommScope executive said on the earnings conference call Thursday.

With more data and video squeezing onto company networks, businesses are starting to feel the need to increase the size of their IT pathways, CommScope executives and industry analysts say.

"CommScope is the leading indicator for a lot of macro trends in the industry," says Oppenheimer analyst Alan Bezoza, who has followed the company for the past decade and has a buy rating on the stock.

Bezoza agrees that there is a big upswing in spending ahead on what he calls "enterprise infrastructure," or the office computer networks. Since the Y2K preparations, business IT systems have been overdue for a large scale upgrade, he says.

Looking beyond the office space, Bezoza sees a need for Internet service providers to go ahead and spend on new access technology. "DSL was a stopgap," says Bezoza.

"There's a bandwidth war between cable and telecom," Bezoza says. "I think we are starting to see a new spending cycle."

This observation is somewhat supported by the fact that fiber-optic glassmaker

Corning

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announced this week that it was going to reopen a portion of its cable manufacturing facility in Concord, N.C.

Corning became an investor favorite around the turn of the century for its role as the top fiber-optic cable supplier to the last bandwidth expansion boom. Corning was forced to close the plant five years ago during the post-bubble collapse of the telecom industry.

Corning shares are up 5% since Wednesday, when the company reported a revival in its optical-fiber business. Investors seem eager for a little replay of that old bandwidth gold rush.